MISSISSAUGA, Ontario, Aug. 07, 2019 // GLOBE NEWSWIRE // - goeasy Ltd. (TSX: GSY), (“goeasy” or the “Company”), a leading full-service provider of goods and alternative financial services, announced its results for the second quarter ended June 30, 2019.

Second Quarter Results

During the quarter the Company generated $276 million of total loan originations, up 18% from the $234 million in the second quarter of 2018. The increased originations led to growth in the loan portfolio of $80.3 million, which reached $960 million at the end of the current quarter, up 40% from $687 million as at June 30, 2018.

Revenue for the second quarter increased to $148 million, up 20% over the same period in 2018, driven by the expansion of the consumer loan portfolio. The net charge-off rate for the quarter was 13.5%, up from 12.4% in the second quarter of 2018, as previously expected and within the Company’s targeted range of 11.5% to 13.5% for 2019.

Growing revenues and continued improvement in operating leverage led to record margins, net income, earnings per share and return on equity. Operating income grew to $40.9 million, up 53% from $26.8 million in the second quarter of 2018, while the operating margin expanded to 28% up from 22%. Net income in the second quarter was $19.6 million, up 66% from $11.8 million in 2018, which resulted in diluted earnings per share of $1.26, up 54% from the $0.82 in 2018.

“During the second quarter we launched our spring media campaign, which helped produce a record level of new customers and an 18% increase in loan application volume, leading to loan growth that nearly doubled the first quarter of the year,” said Jason Mullins, goeasy’s President & Chief Executive Officer. “With a sequential increase in our risk-adjusted yield, the credit quality in the province of Quebec performing close to the portfolio average and secured lending representing 11% of our originations, we are striking the right balance between loan growth, yield and credit risk management.”

“In addition to strong business results, the last several months have been a rewarding time for our Company, as we have received recognition for our culture and the engagement of our team,” Mr. Mullins continued, “After being named one of Canada’s Most Admired Corporate Cultures in 2018, we have also been named one of North America’s Top 50 Most Engaged Workplaces for 2019 by Achievers and one of Canada’s Top 50 FinTech Companies for 2019 by the Digital Finance Institute. These awards are a testament to the passion and dedication that our entire team has for helping our customers improve their financial outcomes. With 1 out of 3 easyfinancial customers graduating to prime credit and 60% experiencing an increase in their credit score within 12 months of borrowing from us, we are proud and inspired to see our vision brought to life.”

Other Key Second Quarter Highlights

easyfinancial

Total application volume increased 18%

Revenue grew to $113 million, up 27%

Secured loan portfolio grew to $89 million, up from $32 million

66% of net loan advances in the quarter were issued to new customers, the highest level since 2012

Aided brand awareness of 83%, up from 75%

Average loan book per branch improved to $3.3 million, an increase of 32%

The delinquency rate on the final Saturday of the quarter was 4.3%, consistent with the 4.2% reported in the same period of 2018

Operating income of $46.9 million, up 41%

Operating margin of 41.4%, an increase from the 37.5% reported in the second quarter of 2018

easyhome

Revenue grew to $34.5 million, up slightly from $34.3 million

Same store revenue increased 3.8%, compared to 6.9%

Consumer lending portfolio within easyhome stores increased to $29.5 million, up from $12.8 million

Revenue from consumer lending increased to $3.9 million, up from $1.6 million

Operating income of $5.6 million, up 10%

Operating margin of 16.1%, an increase from the 14.9% reported in the second quarter of 2018

Overall

37th consecutive quarter of same store sales growth

72nd consecutive quarter of positive net income

Total same store revenue growth of 19.9%

Record return on equity of 25.2% in the quarter, up from 20.9%

Net external debt to net capitalization of 67% as at June 30, 2019, below the Company’s target leverage ratio of 70%

Repurchased 95,500 shares in the quarter under the Company’s Normal Course Issuer Bid, bringing total repurchases since November 2018 to 777,452 shares at a weighted average price of $40.01

Named one of North America’s Top 50 Most Engaged Workplaces for 2019 by Achievers

Named one of Canada’s Top 50 FinTech Companies for 2019 by the Digital Finance Institute

Six Months Results

For the first six months of 2019, goeasy achieved revenues of $288 million, up 21% compared with $238 million in the same period of 2018. Operating income for the period was $79.7 million compared with $51.7 million in the first six months of 2018, an increase of $28 million or 54%. Net income for the first six months of 2019 was $37.8 million and diluted earnings per share was $2.44 compared with $22.9 million or $1.58 per share, increases of 65% and 54%, respectively.

Balance Sheet and Liquidity

Total assets were $1.1 billion as at June 30, 2019, an increase of 39% from $805 million as at June 30, 2018, driven by the growth in the Cash provided by operating activities before the net issuance of consumer loans receivable and purchase of lease assets was $67.3 million in the second quarter of 2019, an increase of 81% from $37.2 million in the same period of 2018.

Based on the cash on hand at the end of the quarter and the borrowing capacity under the Company’s amended revolving credit facility, goeasy had approximately $200 million in funding capacity, which will allow it to achieve its targets for the growth of its consumer loan portfolio through to the third quarter of 2020. The Company has historically been able to obtain the additional financing required to fund the growth of its business at steadily lower costs of borrowing, increasing rates of leverage and more favorable terms. The Company also estimates that once its existing and available sources of capital are fully utilized, it could continue to grow the loan portfolio by approximately $150 million per year solely from internal cash flows.

The Company also estimates that as of June 30, 2019 if it were to run-off its consumer loan and consumer leasing portfolios, the value of the total cash repayments paid to the Company over the remaining life of its contracts would be approximately $1.9 billion.

Outlook

The Company has reaffirmed its 3-year commercial targets for 2019 through 2021. The periods of 2020 and 2021 remain unchanged, with the goal to achieve a consumer loan portfolio between $1.5 and $1.7 billion and return on equity that exceeds 26% by 2021.

The Company continues to pursue a long-term strategy that includes expanding its product range, developing its channels of distribution and leveraging risk-based pricing offers, which increase the average loan size and extend the life of its customer relationships. As such, the total yield earned on its consumer loan portfolio will gradually decline, while net charge-off rates moderate and operating margins expand, resulting in an increase to return on equity.

Updated 2019 Targets

2020 Targets

2021 Targets

Gross Loan Receivable Portfolio at Year End

$1.1B - $1.2B

$1.3B - $1.4B

$1.5B - $1.7B

easyfinancial Total Revenue Yield

49% - 51%

46% - 48%

43% - 45%

New easyfinancial Locations

10 - 20

10 - 20

10 – 20

Net Charge-offs as a Percentage of Average Gross Consumer Loans Receivable

11.5% - 13.5%

11% - 13%

11% - 13%

easyfinancial Operating Margin

40% - 42%

44% - 46%

45% - 47%

Total Revenue Growth

20% - 22%

14 - 16%

10% - 12%

Return on Equity

24%+

26%+

26%+

“As we prepare to cross the $1 billion loan portfolio milestone in the next few weeks, the confidence in our strategy to provide everyday Canadians with a path to a better tomorrow, today, is stronger than ever, “said Mr. Mullins. “We continue to operate in a stable economic environment supported by wage growth that exceeds the level of inflation and unemployment at all-time lows. Furthermore, as we begin to utilize our lowest cost form of debt through the revolving credit facility, our average blended cost of interest has declined to 7.1% this quarter, from 7.6% a year ago, further reducing the borrowing costs for the business. Our balance sheet remains strong and well capitalized, with $200 million in available capital to fund the growth of our business through to the third quarter of 2020 and support our ambitious growth plan to become Canada’s top non-prime consumer lender.”

Dividend

The goeasy Board of Directors has approved a quarterly dividend of $0.31 per share payable on October 11, 2019 to the holders of common shares of record as at the close of business on September 27, 2019.

Forward-Looking Statements

All figures reported above with respect to outlook are targets established by the Company and are subject to change as plans and business conditions vary. Accordingly, investors are cautioned not to place undue reliance on the foregoing guidance. Actual results may differ materially.

This press release includes forward-looking statements about goeasy, including, but not limited to, its business operations, strategy, expected financial performance and condition, the estimated number of new locations to be opened, targets for growth of the consumer loans receivable portfolio, annual revenue growth targets, strategic initiatives, new product offerings and new delivery channels, anticipated cost savings, planned capital expenditures, anticipated capital requirements, liquidity of the Company, plans and references to future operations and results and critical accounting estimates. In certain cases, forward-looking statements are statements that are predictive in nature, depend upon or refer to future events or conditions, and/or can be identified by the use of words such as ‘expects’, ‘anticipates’, ‘intends’, ‘plans’, ‘believes’, ‘budgeted’, ‘estimates’, ‘forecasts’, ‘targets’ or negative versions thereof and similar expressions, and/or state that certain actions, events or results ‘may’, ‘could’, ‘would’, ‘might’ or ‘will’ be taken, occur or be achieved.

Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations and business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company’s operations, economic factors and the industry generally, as well as those factors referred to in the Company’s most recent Annual Information Form and Management Discussion and Analysis, as available on www.sedar.com, in the section entitled “Risk Factors”. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those expressed or implied by forward-looking statements made by the Company, due to, but not limited to, important factors such as the Company’s ability to enter into new lease and/or financing agreements, collect on existing lease and/or financing agreements, open new locations on favourable terms, purchase products which appeal to customers at a competitive rate, respond to changes in legislation, react to uncertainties related to regulatory action, raise capital under favourable terms, manage the impact of litigation (including shareholder litigation), control costs at all levels of the organization and maintain and enhance the system of internal controls. The Company cautions that the foregoing list is not exhaustive.

The reader is cautioned to consider these, and other factors carefully and not place undue reliance on forward-looking statements, which may not be appropriate for other purposes. The Company is under no obligation (and expressly disclaims any such obligation) to update or alter the forward-looking statements whether as a result of new information, future events or otherwise, unless required by law.

About goeasy

goeasy Ltd. offers leasing and lending services in the alternative financial services market and provides everyday Canadians a path to a better tomorrow, today. goeasy Ltd. serves its customers through two key operating divisions, easyfinancial and easyhome. easyfinancial is a non-prime consumer lending business that bridges the gap between traditional financial institutions and costly payday loans. easyfinancial offers a range of unsecured and secured personal installment loans supported by a strong central credit adjudication process and industry leading risk analytics. easyhome is Canada's largest lease-to-own company, offering brand-name household furniture, appliances and electronics to consumers under weekly or monthly leasing agreements through both corporate and franchise stores. Both operating divisions of goeasy Ltd. offer the highest level of customer service and enable customers to transact through an omni channel model that includes over 400 stores and branches across Canada and digital eCommerce enabled platforms.

goeasy Ltd.’s. common shares are listed for trading on the TSX under the trading symbol “GSY” and goeasy’s convertible debentures are traded on the TSX under the trading symbol “GSY-DB”. goeasy is rated BB- with a stable trend from S&P and Ba3 with a stable trend from Moody’s. For more information, visit www.goeasy.com.

Contacts:

Jason MullinsPresident & Chief Executive Officer(905) 272-2788

David IngramExecutive Chairman of the Board(905) 272-2788

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(expressed in thousands of Canadian dollars)

As At

As At

June 30,

December 31,

2019

2018

ASSETS

Cash

29,263

100,188

Amounts receivable

17,417

15,450

Prepaid expenses

4,717

3,835

Consumer loans receivable, net

901,401

782,864

Lease assets

46,701

51,618

Property and equipment

21,924

21,283

Deferred tax assets

9,704

9,445

Derivative financial asset

10,390

35,094

Intangible assets

15,636

14,589

Right-of-use assets

41,592

-

Goodwill

21,310

21,310

TOTAL ASSETS

1,120,055

1,055,676

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities

Accounts payable and accrued liabilities

41,508

45,103

Income taxes payable

13,264

7,499

Dividends payable

4,468

3,247

Deferred lease inducements

-

1,234

Unearned revenue

7,232

6,002

Lease liabilities

48,180

-

Revolving credit facility

20,000

-

Convertible debentures

41,146

40,581

Notes payable

624,935

650,481

TOTAL LIABILITIES

800,733

754,147

Shareholders' equity

Share capital

142,224

138,090

Contributed surplus

15,740

16,105

Accumulated other comprehensive income

4,483

3,624

Retained earnings

156,875

143,710

TOTAL SHAREHOLDERS' EQUITY

319,322

301,529

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

1,120,055

1,055,676

goeasy Ltd.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(expressed in thousands of Canadian dollars except earnings per share)

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

2019

2018

2019

2018

REVENUE

Interest income

82,560

60,775

159,290

114,566

Lease revenue

28,352

30,133

57,834

60,802

Commissions earned

33,352

29,188

63,432

56,127

Charges and fees

3,590

3,247

7,158

6,625

147,854

123,343

287,714

238,120

EXPENSES BEFORE DEPRECIATION AND AMORTIZATION

Salaries and benefits

30,430

29,715

59,107

58,190

Stock-based compensation

2,189

1,735

4,076

3,354

Advertising and promotion

6,936

5,661

12,786

9,590

Bad debts

35,765

27,549

70,159

51,927

Occupancy

5,023

8,668

10,003

17,230

Technology costs

3,019

2,666

5,757

5,632

Other expenses

7,566

7,654

13,767

14,191

90,928

83,648

175,655

160,114

DEPRECIATION AND AMORTIZATION

Depreciation of lease assets

9,378

10,051

19,028

20,053

Depreciation of property and equipment

1,549

1,391

3,050

3,009

Depreciation of right-of-use assets

3,677

-

7,468

-

Amortization of intangible assets

1,391

1,451

2,772

3,218

15,995

12,893

32,318

26,280

Total operating expenses

106,923

96,541

207,973

186,394

Operating income

40,931

26,802

79,741

51,726

Finance costs

Interest expenses and amortization of deferred financing charges

13,244

10,425

26,142

20,095

Interest expense on lease liabilities

592

-

1,195

-

13,836

10,425

27,337

20,095

Income before income taxes

27,095

16,377

52,404

31,631

Income tax expense (recovery)

Current

6,497

6,413

13,854

11,335

Deferred

1,030

(1,857

)

709

(2,599

)

7,527

4,556

14,563

8,736

Net income

19,568

11,821

37,841

22,895

Basic earnings per share

1.34

0.86

2.58

1.67

Diluted earnings per share

1.26

0.82

2.44

1.58

Segmented Reporting

Three Months Ended June 30, 2019

($ in 000's except earnings per share)

easyfinancial

easyhome

Corporate

Total

Revenue

Interest income

79,817

2,743

-

82,560

Lease revenue

-

28,352

-

28,352

Commissions earned

31,277

2,075

-

33,352

Charges and fees

2,242

1,348

-

3,590

113,336

34,518

-

147,854

Total operating expenses before

depreciation and amortization

63,085

17,172

10,671

90,928

Depreciation and amortization

Depreciation and amortization of lease assets, property and equipment and intangible assets

1,777

9,829

712

12,318

Depreciation of right-of-use assets

1,539

1,945

193

3,677

3,316

11,774

905

15,995

Segment operating income (loss)

46,935

5,572

(11,576

)

40,931

Finance costs

Interest expenses and amortization of deferred financing charges

13,244

Interest expense on lease liabilities

592

13,836

Income before income taxes

27,095

Income taxes

7,527

Net Income

19,568

Diluted earnings per share

1.26

Three Months Ended June 30, 2018

($ in 000's except earnings per share)

easyfinancial

easyhome

Corporate

Total

Revenue

Interest income

59,669

1,106

-

60,775

Lease revenue

-

30,133

-

30,133

Commissions earned

27,601

1,587

-

29,188

Charges and fees

1,745

1,502

-

3,247

89,015

34,328

-

123,343

Total operating expenses before

depreciation and amortization

53,663

18,642

11,343

83,648

Depreciation and amortization

Depreciation and amortization of lease assets, property and equipment and intangible assets

1,996

10,588

309

12,893

Segment operating income (loss)

33,356

5,098

(11,652

)

26,802

Finance costs

Interest expense and amortization of deferred financing charges

10,425

Income before income taxes

16,377

Income taxes

4,556

Net Income

11,821

Diluted earnings per share

0.82

Six Months Ended June 30, 2019

($ in 000's except earnings per share)

easyfinancial

easyhome

Corporate

Total

Revenue

Interest income

154,234

5,056

-

159,290

Lease revenue

-

57,834

-

57,834

Commissions earned

59,323

4,109

-

63,432

Charges and fees

4,390

2,768

-

7,158

217,947

69,767

-

287,714

Total operating expenses before

depreciation and amortization

123,011

33,090

19,554

175,655

Depreciation and amortization

Depreciation and amortization of lease assets, property and equipment and intangible assets

3,595

19,930

1,325

24,850

Depreciation of right-of-use assets

3,056

4,027

385

7,468

6,651

23,957

1,710

32,318

Segment operating income (loss)

88,285

12,720

(21,264

)

79,741

Finance costs

Interest expense and amortization of deferred financing charges

26,142

Interest expense on lease liabilities

1,195

27,337

Income before income taxes

52,404

Income taxes

14,563

Net Income

37,841

Diluted earnings per share

2.44

Six Months Ended June 30, 2018

($ in 000's except earnings per share)

easyfinancial

easyhome

Corporate

Total

Revenue

Interest income

112,755

1,811

-

114,566

Lease revenue

-

60,802

-

60,802

Commissions earned

53,101

3,026

-

56,127

Charges and fees

3,525

3,100

-

6,625

169,381

68,739

-

238,120

Total operating expenses before

depreciation and amortization

102,200

37,073

20,841

160,114

Depreciation and amortization

Depreciation and amortization of lease assets, property and equipment and intangible assets

4,364

21,154

762

26,280

Segment operating income (loss)

62,817

10,512

(21,603

)

51,726

Finance costs

Interest expense and amortization of deferred financing charges

20,095

Income before income taxes

31,631

Income taxes

8,736

Net Income

22,895

Diluted earnings per share

1.58

Summary of Financial Results and Key Performance Indicators

($ in 000’s except earnings per share and percentages)

Three Months Ended

Variance

Variance

June 30, 2019

June 30, 2018

$ / bps

% change

Summary Financial Results

Revenue

147,854

123,343

24,511

19.9%

Operating expenses before depreciation and amortization

90,928

83,648

7,280

8.7%

EBITDA

47,548

29,644

17,904

60.4%

EBITDA margin

32.2%

24.0%

820 bps

34.2%

Depreciation and amortization expense

15,995

12,893

3,102

24.1%

Operating income

40,931

26,802

14,129

52.7%

Operating margin

27.7%

21.7%

600 bps

27.6%

Finance costs

13,836

10,425

3,411

32.7%

Effective income tax rate

27.8%

27.8%

-

-

Net income

19,568

11,821

7,747

65.5%

Diluted earnings per share

1.26

0.82

0.44

53.7%

Return on equity

25.2%

20.9%

430 bps

20.6%

Key Performance Indicators

Same store revenue growth (overall)

19.9%

28.4%

(850 bps)

(29.9%)

Same store revenue growth (easyhome)

3.8%

6.9%

(310 bps)

(44.9%)

Segment Financials

easyfinancial revenue

113,336

89,015

24,321

27.3%

easyfinancial operating margin

41.4%

37.5%

390 bps

10.4%

easyhome revenue

34,518

34,328

190

0.6%

easyhome operating margin

16.1%

14.9%

120 bps

8.1%

Portfolio Indicators

Gross consumer loans receivable

959,708

686,573

273,135

39.8%

Growth in consumer loans receivable

80,338

84,849

(4,511)

(5.3%)

Gross loan originations

276,355

233,811

42,544

18.2%

Total yield on consumer loans (including ancillary products)

50.4%

55.2%

(480 bps)

(8.7%)

Net charge-offs as a percentage of average gross consumer loans receivable

13.5%

12.4%

110 bps

8.9%

Potential monthly lease revenue

8,365

8,973

(608)

(6.8%)

($ in 000’s except earnings per share and percentages)

Six Months Ended

Variance

Variance

June 30, 2019

June 30, 2018

$ / bps

% change

Summary Financial Results

Revenue

287,714

238,120

49,594

20.8%

Operating expenses before depreciation and amortization

175,655

160,114

15,541

9.7%

EBITDA

93,031

57,953

35,078

60.5%

EBITDA margin

32.3%

24.3%

800 bps

32.9%

Depreciation and amortization expense

32,318

26,280

6,038

23.0%

Operating income

79,741

51,726

28,015

54.2%

Operating margin

27.7%

21.7%

600 bps

27.6%

Finance costs

27,337

20,095

7,242

36.0%

Effective income tax rate

27.8%

27.6%

20 bps

0.7%

Net income

37,841

22,895

14,946

65.3%

Diluted earnings per share

2.44

1.58

0.86

54.4%

Return on equity

24.7%

20.6%

410 bps

19.9%

Key Performance Indicators

Same store revenue growth (overall)

20.3%

26.0%

(570 bps)

(21.9%)

Same store revenue growth excluding easyfinancial (easyhome)

4.2%

6.1%

(190 bps)

(31.1%)

Segment Financials

easyfinancial revenue

217,947

169,381

48,566

28.7%

easyfinancial operating margin

40.5%

37.1%

340 bps

9.2%

easyhome revenue

69,767

68,739

1,028

1.5%

easyhome operating margin

18.2%

15.3%

290 bps

19.0%

Portfolio Indicators

Gross consumer loans receivable

959,708

686,573

273,135

39.8%

Growth in consumer loans receivable

125,929

160,027

(34,098)

(21.3%)

Gross loan originations

495,793

436,177

59,616

13.7%

Total yield on consumer loans (including ancillary products)

50.2%

55.6%

(540 bps)

(9.7%)

Net charge-offs as a percentage of average gross consumer loans receivable

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